September 2024

Capital expenditures (CapEx) are funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment. CapEx is often used to undertake new projects or investments by a company. Making capital expenditures on fixed assets can include repairing a roof if the useful life of the roof is extended, purchasing a piece of equipment, or building a new factory. What is CapEx? CapEx is the funds a company uses to acquire, maintain and update its physical assets. It can use them to invest in projects on fixed assets, like repairing a roof or purchasing additional equipment. These expenses typically are tangible items, though they can be intangible, like a patent, trademark or copyright. Companies consider capital expenditures as assets because they can sell them. The main goal of capital expenditure is to increase operations, add revenue or give another economic benefit from the spending. Most accounting and financial roles in commercial businesses involve monitoring and calculating capital expenditures.Capital expenditures may require approval from shareholders or a board of directors before the company uses them. An expense generally is a capital expenditure item when the asset or investment has a lifespan greater than one year. In record-keeping, you place it on the balance sheet instead of expensing it on the income statement when calculating financial reports. Cash flow statements and investing activity documents can also include capital expenditure figures. Some industries, such as utilities, manufacturing, telecommunications and oil and gas, focus more on capital expenditures than others. What’s the importance of calculating capital expenditure? Capital expenditure helps show how much a company is investing in its fixed assets, and the figure often covers the lifetime of an asset. Investors and financial analysts often review cash flow statements to analyze the expenditure values through acquisitions, capital spending or purchasing property, plant and equipment (PP&E). Calculating capital expenditure also helps in reviewing a company’s spending using the balance sheet’s depreciation expense section.To assess overall business performance, you can subtract the capital expenditures amount from operating expenses to determine the free cash flow for a company, which is the amount of cash a business gas after accounting for capital expenditures and operating expenses. Here’s the formula for calculating capital expenditure: CapEx = current PP&E – previous PP&E + current depreciation Types of Capital Expenditures There are normally two forms of capital expenditures. These expenses can be both tangible (machine) and intangible (patent) Expenses for fostering an increase in a company’s future growth Expenses for maintaining present operating levels. Importance of Capital Expenditures in Business CapEx is often used to undertake new projects or investments by a company, smart capital expenditures help businesses grow. From a long-term financial planning perspective, CapEx analysis helps leaders understand whether an asset offers an attractive rate of return. That way, companies can balance maintaining existing equipment and property with having enough capital to invest in growth. Other important considerations include: Initial costs: Depending on the industry, capital expenditures are generally more expensive than acquiring the use of the same asset on an operating basis. Think purchasing a fleet vehicle versus leasing or signing on a contract delivery service. It’s crucial to understand the long-term benefits of owning an asset. Irreversibility: A company will most likely incur losses when undoing a capital expenditure. That’s because the market for capital equipment tends to be poor, which means acquired assets are likely better off used by the company itself. Depreciation: Once an asset is being put to use, depreciation begins and may lead to a decrease in an organization’s asset accounts. Operating Expense vs. Capital Expense Operating expense (OpEx) An operating expense (OpEx) is an expense required for the day-to-day functioning of a business. This means a business incurs an operating expense on a recurring basis. Operating expenses include things like insurance, payroll, and marketing. A capital expense (CapEx) Capital expense (CapEx), on the other hand, is incurred to create a benefit in the future. They are long-term in nature and are generally used to acquire things like property, equipment, and technology.   Capital expenditure Operating expenditure Purpose Assets meant to benefit the business for more than one year Costs to run day-to-day operations Listed as Equipment or property Operating cost When it is accounted for Depreciated over the asset’s useful life (in years) Current month or year FAQs What Type of Investment Is CapEx? CapEx is the investments that a company makes to grow or maintain its business operations. Capital expenditures are less predictable than operating expenses that recur consistently from year to year. A company that buys expensive new equipment would account for that investment as a capital expenditure. It would therefore depreciate the cost of the equipment throughout its useful life.  What Is an Example of CapEx? The purchase is often capitalized and treated as CapEx when a company acquires a vehicle to add to its fleet. The cost of the vehicle is depreciated over its useful life and the acquisition is initially recorded on the company’s balance sheet. This is treated differently than OpEx, such as the cost to fill up the vehicle’s gas tank. The tank of gas has a much shorter useful life to the company so it’s expensed immediately and treated as OpEx.

A partnership is a kind of business where a formal agreement between two or more people is made. They agree to be co-owners, distribute responsibilities for running an organisation and share the income or losses that the business generates. These features of partnerships are documented in a document which is known as partnership deed. What is a Partnership Deed? Partnership deed is a partnership agreement between the partners of the firm which outlines the terms and conditions of the partnership between the partners. The purpose of a partnership deed is to provide clear understanding of the roles of each partner, which ensures smooth running of the operations of the firm. The Partnership comes into the limelight when: There is an outcome of agreement among the partners. The agreement can be either in written or oral form. The Partnership Act does not demand that the agreement has to be in writing. Wherever it is in the form of writing, the document, which comprises terms of the agreement is called ‘Partnership Deed.’ It usually comprises the attributes about all the characteristics influencing the association between the partners counting the aim of trade, the contribution of capital by each partner, the ratio in which the gains and losses will be divided by the partners and privilege and entitlement of partners to interest on loan, interest on capital, etc,   Importance of a Partnership Deed It helps partners to define the terms of their relationship. It regulates the nature of business and liabilities, rights and duties of all partners. It helps to avoid misunderstandings between the partners since all of the terms and conditions of the partnership are specified in the deed.  In the case of a dispute amongst the partners, it will be settled as per the terms of the partnership deed. There will be no confusion between the partners regarding the profit and loss sharing ratio amongst them.   It mentions the role of each individual partner. It contains the remuneration that is to be paid to partners, thereby avoiding any dispute or confusion.  It ensure smooth functioning of the firm as the terms and liabilities between partners are in a written form. Types of Partnership Deeds General Partnership Deed: The general partnership deed contains the terms and conditions of a general partnership, where each partner shares equal responsibility for the management of the firm business and are jointly liable for debts or obligations. Limited Partnership Deed: The limited partnership deed establishes a limited partnership, which includes general and limited partners. The general partners have unlimited liability for the debts of the partnership firm, while the limited partners have limited liability and do not participate actively in the management of the business. Contents of a Partnership Deed The partnership deed contains the following details: Name of the firm The partners of the firm should decide the firm’s name which adheres to the provisions of the Partnership Act. The firm name is the name under which the business is conducted. Details of the partners  The deed should include details of all the partners, such as their names, addresses, contact number, designation, and other particulars. Business of the firm  The deed should mention the business that the firm undertakes. It may be dealing with producing goods or rendering services. Duration of firm  The deed should mention the duration of the partnership firm, i.e. if the firm is constituted for a limited period, for a specific project or for an unlimited period. Place of business  The deed should contain the principal place of business where it carries on the partnership business. It should also mention the names of any other places where it conducts business.  Capital contribution Each partner will contribute an amount of capital to the firm. The entire capital of the firm and the share contributed by each partner are to be mentioned in the deed. Sharing of profit/loss  The ratio of sharing profits and losses of the firm amongst partners should be noted in the deed. It can be shared equally amongst all partners, or according to the capital contribution ratio or any other agreed ratio.  Salary and commission The details of the salary and commission payable to partners should be mentioned in the deed. The salary and commission can be paid to the partners based on their role, capabilities or any other capacity. Partner’s drawings The drawings from the firm allowed to each partner and interest to be paid to the firm on such drawings, if any should be mentioned in the deed. Partner’s loan  The deed should mention whether the business can borrow loans, the interest rate of loans, properties to be pledged, etc. It can also mention if a partner of the firm can borrow loans from the business or not. Duties and obligations of partners  The rights, duties and obligations of all the partners of the firm should be mentioned in the deed to avoid future disputes.  Admission, death and retirement of partners The deed should mention the date of admission of the partner, the regulations governing the admission of a new partner, resignation, or changes after the death of a partner of the firm. Accounts and audit  The deed should contain details about the audit procedure of the firm. It should mention the details of how the partnership accounts are to be prepared and maintained.  Documents Required for Partnership Deed Registration PAN card of all the partners. Address proof of all the partners, such as voter ID, Aadhar card, driving licence, etc. Address proof of the firm Partnership Deed Registration The partnership deed is registered under the Indian Registration Act, 1908. It must be printed on non-judicial stamp paper with a value of Rs.200 or more based on the capital of the partnership firm. It has to be signed by all the partners and each partner should have a copy of the partnership deed. After the deed is signed by the partners, it must be registered with the Sub-Registrar/ Registrar Office of the jurisdiction where the partnership firm is located. The stamp duty for registering the partnership

Mutation is the process through which the name entry is changed in the government records once a property has been transferred in the name of a new owner. Land and property mutation helps the local authority to fix property tax liability and charge it accordingly. Land Mutation Mutation of land is the change of title ownership from one person to another when a property is sold or transferred. By mutating a property or land, the new owner gets the title of the property recorded on his/her name in the land revenue records of the local municipal corporation, and the government of Uttar Pradesh can charge property tax from the rightful owner. The change in title ownership that occur due to the reasons such as the death of the original owner and following transfer of the owner due to inheritance or succession Importance of Property Mutation Mutating a property is a mandatory process in all legal transactions involving property. Mutation becomes essential for deciding the tax liability when the property ownership gets changed. One needs to get mutation done and get the new owner details updated in the revenue records maintained by civic bodies like Municipalities, Panchayats or Municipal Corporations. Through mutation of land, a person can acquire the rights of the land.  To avoid the controversy over the ownership of the land, the mutation is worked out by both the parties, i.e. buyer and seller. Concerned Authority The parties can approach the Offices of the concerned Revenue Inspector and submit the application forms relating to Mutation of the property at the Gram Panchayat level or in the Office of the relevant Block Land and Land Reforms Officer at the Panchayat Samiti level or in the office of district magistrate of particular block or district. Documents Required for Mutation Process Death certificate Copy of Succession Certificate Affidavit on stamp paper Up-to-date property tax payment receipt in case of Power of Attorney Copy of Power of Attorney Application for mutation with stamp affixed Registration deeds (Both current & previous) Sale deeds Affidavit on stamp paper of requisite value Receipt of current property tax payment Ration Card Aadhaar Card The below are the respective documents to be enclosed for Mutation in case of sale of a property along with the application form. Application for mutation with stamp affixed Registration deeds (Both current & previous) Sale deeds Affidavit on stamp paper of requisite value  Up-to-date property tax payment receipt Ration Card Aadhaar Card Property Mutation Application Procedure In Uttar Pradesh, the applicants must follow the following steps to apply for the land mutation by submitting the application form offline. Step 1: The applicant can visit the nearest responsible block or sub-registrar office for the complete registration process of the mutation. Step 2: You have to get the application form from the concerned office and have to fill out an application form in a prescribed format. Step 3: You have to fill the mutation application form with requested details without any mistakes.  Provide the details such as old owner details, new owner details and also mention the cause of mutation. Step 4: You have to submit the application form in the prescribed format to the concerned operator along with all the supporting documents. Step 5: After applying, you have to attach the specified documents along with the application form. Step 6: Sub-registrar officer will forward the request for a Mutation certificate online to the concerned authority. Step 7: The concerned Department will process the mutation request, and after successful verification, the authorised Government Officer will issue the mutation document. n Uttar Pradesh, the applicants must follow the following steps to apply for the land mutation by submitting the application form online. Step 1: The applicants have to go to the official e-NagarSewa Portal of Uttar Pradesh to apply for the land mutation online. Step 2: You have to click on the “Online Mutation” tab that is visible on the home page. Step 3: Then you will be taken to the Online Facility page where you have click on the Apply button. Step 4: After that, the citizen log in page will be displayed. In case if you’re a new user, then you will have to register yourself with the portal by clicking on the ‘Register’ option to avail the services. Step 5: Upon clicking on the register button, the citizen’s registration page  Step 6: Then you have to fill out all the mandatory details such as the applicant’s name, applicant’s address, mobile number and e-mail address. Then you must create a password and enter the captcha text image. After that, click on the “Submit” button. Step 7: Once you got registered with the portal, log in to the portal using your user id and user password. Step 8: You have to make a request with the ULB (Urban Local Body) for a New Property Mutation. There are two types of cases to search for mutation details: Case 1: Registered Property in the E-Nagarsewa portal You can verify your property details by entering your property ID or else you can search for the property. Case 2: Property is not in the E-Nagarsewa portal In this case, you have to search the property at the particular ULB website. Step 9: Enter your property ID and click on the ‘Show Property Detail’ Step 10: Then you have to click on the Add mutation application form a click on the ‘save record’ button. Step 11: You have to fill out all the requested details such as old owner details and new owner details. Step 12: You have to select the cause for mutation from the following drop-down list: Due to Death of Recorded Owner Due to a Registered Sale Deed Will Deed Registered Gift Deed Family Settlement By Order of Court Hibba   Step 13: Fill in the details further in the application form and upload the requisite/mandatory documents and submit the application. Step 14: After uploading all the requested documents (scanned documents), click on the “Save Record” button. Step 15: The payment for mutation is dependent at the ULB based on the cause of mutation that you have mentioned. Step 16: Now you

TDS (Tax Deducted at Source) means collection of taxes by the Indian government at the source of income. TDS is applicable on various income like salary, rent, dividend, asset sales etc. TDS (Tax Deducted at Source) is an important part of Income Tax compliance. TDS has to be deducted at the rates prescribed by the tax department. Below you’ll find the TDS rate chart, which summarises all the TDS provisions of the Income Tax Act. Budget 2024 introduces reductions in the TDS rates for specific payments to foster business operations and improve compliance among taxpayers. These changes are set to take effect on either October 1, 2024 or April 1, 2025. Budget 2024: Rationalization of TDS Rates Section Current TDS Rate New TDS Rates Effective Date Section 194H – Payment of commission or brokerage 5% 2% October 1, 2024 Section 194-IB – Payment of rent by certain individuals or HUF 5% 2% October 1, 2024 Section 194M – Payment of certain sums by certain individuals or Hindu undivided family 5% 2% October 1, 2024 Section 194-O – Payment of certain sums by e-commerce operator to e-commerce participant 1% 0.1% October 1, 2024 Section 194F – Payments on account of repurchase of units by Mutual Fund or Unit Trust of India Proposed to be omitted — October 1, 2024 TDS Rate Chart for FY 2024-2025 The TDS rates as applicable in the Financial Year 202-2024 (Assessment Year 2024-2025) are highlighted in the TDS Rate Chart table below – Section Nature of payment Threshold limit (INR) Rate of TDS 192 Salary Taxable income liable to income tax Any of the following rate as opted by the employee – ·        Normal slab rate; or ·        New tax regime slab rate. 192A Premature withdrawal from Employees’ Provident Fund INR 50,000 10% 193 Interest on securities INR 2,500 10% 194 Dividend INR 5,000 10% 194A Interest (other than interest on securities) Bank deposit/ banking co-operative society deposits/ post office deposit – ·        In case of senior citizens – INR 50,000; ·        Any other case – INR 40,000. Deposits (other than above) – INR 5,000 10% 194B Winning from lottery/ crossword puzzle 10,000 30% 194BA Winning from online games – 30% 194BB Winning a horse race 10,000 (notably, a threshold of INR 10,000 will apply to aggregate winning during the Financial Year) 30% 194C Payments to contractors Single transaction – INR 30,000; and Aggregate of transactions – INR 1,00,000 In case of individuals/ HUF – 1% Any other case – 2% 194D Insurance commission INR 15,000 In the case of individuals – 5% In case of company – 10% 194DA Payment relating to life insurance policy INR 1,00,000 5% 194E Payment to non-resident sportsmen/ sports association – 20% 194EE Payments relating to deposits under NSS (National Savings Scheme) INR 2,500 10% 194F Payment towards repurchase of the unit by Unit Trust of India/ Mutual Fund – 20% 194G Commission/ prize, etc. on sale of the lottery tickets INR 15,000 5% 194H Commission/ Brokerage INR 15,000 5% 194-I Rent INR 2,40,000 In the case of plant and machinery – 2% In the case of land/ building/ factory/ furniture/ fittings – 10% 194-IA Payment towards transfer of certain immovable property (other than agricultural land) INR 50 Lakhs 1% 194-IB Payment of rent by HUF/ individual (not liable to tax audit) INR 50,000 per month 5% 194-IC Payment under JDA (Joint Development Agreement) NIL 10% 194J FTS (Fees for Professional or Technical Services) INR 30,000 In the case of fees for technical services/ specified royalties – 2% In any other case – 10% 194K Income relating to specified units INR 5,000 10% 194LA Payment towards compensation for acquisition of certain specified immovable property [land (other than agricultural land)/ building or part thereof] INR 2,50,000 10% 194LB Income relating to interest from infrastructure debt fund NIL 5% 194LBA Income from the units of business trust NIL 10% 194LBB Income from units of investment funds NIL 10% 194LBC Income relating to investment in securitization trust NIL In case the payee is individual/ HUF – 25% In any other case – 30% 194LC Income relating to interest from Indian Company/ business trust NIL 5% 194LD Income relating to interest on certain specified bonds/ government securities NIL 5% 194M Payment of certain sums (i.e. commission/ brokerage/ fees for professional INR 50 Lakhs 5% 194N Payment of certain amounts in cash, i.e. cash withdrawals INR 20 Lakhs in case the recipient has not furnished income tax return for three previous years (immediately preceding the previous year in which cash is withdrawn) INR 1 crore in any other case In case amount/ aggregate amounts exceed INR 20 Lakhs – 2% In case amount/ aggregate amounts exceed INR 1 crore – 5% 194-O Payment of sum by an e-commerce operator to participant INR 5 Lakhs 1% 194P Tax deduction in case of senior citizen of 75 or more years age Taxable income which is liable to tax As per rates in force 194Q Payment towards purchase of goods INR 50 Lakhs 0.10% 194R Benefit/ perquisite in respect of business/ profession INR 20,000 10% 194S Payment relating to transfer of virtual digital asset Payment done by specified person – INR 50,000 Payment done by any other person – INR 10,000 1% 195 Payment of any other amount/ sum to a non-resident Income relating to investment done by a non-resident Indian Citizen NIL 20% Income relating to LTCG referred in section 115E of the Income Tax Act with regard to a non-resident Indian Citizen NIL 10% Income relating to LTCG referred in section 112(1)(iii) of the Income Tax Act NIL 10% Income relating to LTCG referred in section 112A of the Income Tax Act NIL 10% Income relating to STCG referred in section 111A of the Income Tax Act NIL 15% Any other income relating to LTCG NIL 20% Income relating to interest payable by the Government/ Indian concerns on money borrowed/ debt incurred in foreign currency NIL 20% Any other income NIL 30% 206AA TDS deduction

Udyog Aadhaar, now known as Udyam Registration, is a 12-digit Unique Identification Number that facilitates registration for the small business sector and is a crucial initiative for Indian small and medium enterprises (SMEs) seeking growth and government support. It was issued by the Ministry of Micro, Small, and Medium Enterprises (MSMEs) of the Government of India in September 2015, and it facilitates a hassle-free, paperless online registration process. The reason behind Udyam registration is to boost the SMB sector in India. What’s New with Udyam Registration Mandatory Migration As of 2023, Udyog Aadhaar registrations are no longer valid. All businesses need to migrate to the Udyam platform, to continue enjoying the benefits. If the entrepreneurs fail to migrate to Udyam Registration, then UAM will not be valid, and they will be required to register again for Aadhaar Udyam Registration. Simplified Categories The new registration system classifies businesses into three categories (Micro, Small, and Medium) based on their annual turnover and investment. This simplifies the process and ensures accurate classification Enhanced Benefits Udyam registration unlocks a wider range of government schemes and benefits, including easier access to credit, subsidies, and tender participation Udyam registration for MSME As mentioned above, Udyam registration is the new process for registering micro, small and medium enterprises introduced by the Ministry of Micro, Small & Medium Enterprises (MSME) on 1st July 2020.     A permanent registration number will be issued to MSMEs after Registration. Udyam registration is vital for availing the various benefits of schemes or programs of the Ministry of MSME, such as the Credit Guarantee Scheme, public procurement policy, additional edge in Government Tenders and protection against delayed payments, etc. Key Benefits of Udyam Registration Hassle-free online registration: The process is completely online and free, requiring only your Aadhaar number and basic business details Multiple registrations: Entrepreneurs can now register multiple businesses under one Udyam number, simplifying management Self-declaration: No documents or proof are required beyond your Aadhaar, promoting transparency and ease Government tender preference:  Registered MSMEs get priority consideration for government tenders, increasing business opportunities Faster payment protection: Udyam registration helps secure protection against delayed payments from buyers Access to schemes: Unlock various government schemes and financial assistance programs Credibility enhancement: Udyam Registration acts as official proof of your business existence Documents Required Name of the Owner Category Name of Business  Type of Business Official Address Date of Commencement Details of Previous Organization (if any) Bank Details Number of employees National Industrial Classification Code (NIC) Amount invested in Plant & Machinery Details of Industry Centre (DIC) Udyam Registration Fees The Registration for MSMEs under Udyam Registration Portal is entirely online, and there is no fee for MSME registrations. It is free of cost. Udyam Registration Process Step 1: Visit the official Udyam Registration Portal Step 2: Enter the 12-digit Aadhaar no. and name of the entrepreneur Step 3: Click on ‘Validate’ and ‘Generate OTP’ Step 4: Enter the OTP received on the registered mobile number Step 5: Once the verification is successfully done, fill out the form with all the relevant details Step 6: Review the form and click on the ‘Submit’ button Step 7: Enter the OTP again received on the mobile number  Step 8: Click on ‘Submit’ once for the final submission FAQs Do I need to register again if I already have Udyog Aadhaar? Yes, all Udyog Aadhaar registrations became invalid in 2023. Migrating to the Udyam platform is crucial to continue enjoying the associated benefits. What are the key benefits of Udyam registration? Benefits include easier online registration, access to government schemes, faster payment protection, tender preference, and enhanced credibility.